U.S. reports increase in key inflation gauge

The Commerce Department’s personal consumption expenditure index rose 0.2 percent from June to July. On an annualized basis, it rose from 3.3 percent compared to a year before, up from 3.0 percent in June. The Commerce Department describes the index as a measure “for capturing inflation across a wide range of consumer expenses and reflecting changes in consumer behavior.”

What does this increase mean? The PCE index is the Federal Reserve’s preferred gauge for measuring inflation. The fact that it is increasing could motivate the Fed to hike interest rates.

Dig deeper: Listen to Nick Eicher’s discussion with David Bahnsen on The World and Everything in It podcast analyzing the Federal Reserve’s latest statements on monetary policy.